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Thursday, January 9, 2014

European Mergers in 2013

Joe and I have recently been commenting about merger activity or lack thereof. In his most recent post (viewed here) Joe notes, "Overall Volume is a Tale of Two Continents: U.S. volume is up over 11% over 2012 to over $1T-a post crisis high. Europe, however, continues to lag, reflecting its structural problems." In the post before that (viewed here) I discussed deals of the year for 2013. Combining these two streams, today's post deals with European Mergers in 2013, drawing on the note, Cross Market Commentary: European Merger Activity Falls in 2013. While aggregate deal activity was down in Europe in 2013, an analysis of quarterly activity reveals interesting and juxtaposed trends: the dollar volume of activity increased each quarter while the number of deals decreased each quarter. Obviously, the average deal size was increasing by quarter as well. The largest European Merger deal of the year was the 19 million dollar deal by Brazilian telecommunications firm Oi SA to acquire Portugal Teleccom SGPS S.A. Some of the Trends noted in the European Report are also borne out by Thompson Reuters. Here we find that US merger activity accounted for the largest percentage of world activity since 2001 while European Activity hit a ten year low. This reflects Joe's comment about the tale of two continents.Regardless of the trends it is certain that mergers will continue to be important in the US, in Europe and in the World. Why? Because The forces that drive mergers will continue to be dominant in all of these markets, specifically changes in: technology, consumer tastes, regulation, competition, and factors of production. The size and volume of activity will ebb and flow, but the fundamental factors driving deals are ever present. More detail is contained in our post on Catalysts for Merger.All the best,Ralph

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About MergerProf

In addition to their day jobs, Joe and Ralph teach acquisition finance at the Amsterdam Institute of Finance. This blog was created in the summer of 2012 as a tool for those interested in acquisition finance and related material. Admittedly, we define related material broadly to include mergers, private equity, banking, governance, deal making and, well, finance in general. We hope you will enjoy and contribute, critiquing, expanding and providing your own examples related to the posts. We encourage you to join us in this adventure and, for some of you, to see you in Amsterdam, New York or Philadelphia.